Serial social entrepreneur and Eastside Primetimers consultant Sarah Dunwell has learned a lot in establishing and supporting many trading operations over the years. Provide a great product and invest in the best people, she says.
Q: You’ve had a lot of experience in establishing social enterprises over the past 12 years. What’s the key to creating a business plan that works?
A: In my experience, organisations and individuals are driven to start their social businesses for one of two reasons. They want to have a positive impact on the lives of the people in communities they care passionately about, or they have a pressing need to increase revenue, diversify their income streams and earn some unrestricted income.
Those two things should go hand-in-hand, but that works only if you give both equal focus – it’s no good developing a model that changes the lives of rough-sleepers or young people in your region, for instance, if you’re going to run out of money before you become profitable. Equally, you can make all the profit in the world, but if you don’t make the difference you wanted to in the world, you’ll disappoint yourselves and your investors.
So, in a nutshell, plan to make money and do good, give equal focus to both and put robust impact and financial measurement tools in place from the start.
Q: Trading is a new area for many people in the third sector. What pitfalls should they watch out for?
A: Setting up a social business is no less costly than launching a commercial one, but many third sector organisations think they can sweat their existing people, assets and resources to start up quickly or with limited funding. In the past, both local and national government have looked to social enterprise to solve big societal issues on the cheap and, honestly, that’s never going to happen!
Running your social business will cost MORE than running a commercial one, especially in the early days, as you have both a social and a financial return to make. That can lead to cost-cutting – inexperienced colleagues managing businesses offering poor service and that lack the credibility to compete in the marketplace.
“Running your social business will cost MORE than running a commercial one, especially in the early days”
Customers will only buy from you if your product and service are second to none: very few consumers buy purely out of support for your cause, so don’t play the sympathy card! Employ experienced people with entrepreneurial skills, forecast your cashflow requirements as accurately as you can and make sure you have the funding in place to cover them. Make sure your product and service are second to none and, that way, you give yourself the best chance of success.
Q: You’ve devoted much of your career to combining enterprise with purpose. Why is this important to you?
I started my first social business after volunteering at a local night shelter for the homeless. I was serving soup and sandwiches to mostly young men who were desperate to find work. They didn’t need a bed for the night – they needed a job. I tried everything I could to get local employers to take on one of these bright, sparky confident young people, but no one would take a risk. So I sold my family business and started a company that would take that risk. And they didn’t let me down. They were as passionate as I was to play their part in growing our business and I still see some of them today, working in local businesses, some of them with families and homes and lives they never dreamed they could have.
That’s why social businesses matter – they make a difference. All businesses make a difference, but for some, that’s more positive than for others. I get out of bed every day wanting to change the world, just a little bit, and to support organisations I work with to come with me on that journey.
This article originally appeared in the ‘Enterprise Matters’ edition of EP Insights, a regular new management briefing for social sector leaders produced by social sector consultants Eastside Primetimers. ‘Enterprise Matters’ explores challenges, tips and innovations to boost social enterprise and charity trading.